Everything You Need to Know About YouTube CPM

youtube cpm calculation cost per thousand views

Are you planning to put up a YouTube channel for your small business? Or perhaps you already have one and are looking to increase your audience? 

In 2020, YouTube recorded over 38 million different channels on the platform. Moreover, these channels upload around 500 hours of video content per minute. 

For someone who has a YouTube channel, you need to see the potentials of growing your business using the platform. And when it comes to growing a YouTube channel, there are key metrics to consider. 

One of the most important metrics you need to understand is YouTube CPM. It's an amount that advertisers pay you for their ads that you insert into your YouTube videos. 

How exactly does YouTube CPM work, though? How much money can you make from CPM? Continue reading below as we tackle everything you need to know about YouTube CPM rates. 

YouTube CPM: What’s It All About? 

To learn how YouTube CPM works, you must first understand what CPM is all about. CPM, or “Cost per Mille,” pertains to the amount an advertiser pays a content creator. 

The word “mille” means “thousand” in Latin. Hence, the advertisers will pay you a certain amount for every 1,000 views their ads get. The advertisers will give you the CPM payout directly. 

YouTube will take a percentage of the money. Thereafter, they will also give you, the YouTuber, your cut of the payment. 

From an advertiser’s standpoint, the CPM is also the same as the RPM or revenue per mille. We’ll compare CPM and RPM in detail later on. 

As for the breakdown of the payment, YouTube gets about 45% of it. Hence, if an advertiser pays $100 for the CPM, YouTube takes $45 from the payout while you get the remaining $55. 

Though some content creators may feel they’re getting the short end of the stick, you can easily compensate for the earnings by consistently creating new videos. 

With the pandemic, YouTube experienced a surge in its views and subscriber base. This doesn’t come as a surprise considering millions of people choose to stay at home for health and safety reasons. 

You need to take advantage of this growth and ride the tide. Keep in mind that it's the CPM rate that concerns the advertisers more compared to content creators. The CPM dictates how much advertisers should pay you. 

CPM vs RPM 

The CPM is a numerical definition of the income that you get from advertiser payouts. Moreover, it brings about another parameter, which is the RPM. This is the metric that computes your income considering YouTube’s retention. 

The CPM and RPM are directly proportional to each other. However, CPM concerns the advertisers more than the RPM does. On the flip side, it is the RPM that concerns YouTubers more. 

Interestingly, YouTube doesn't inform content creators about their RPM value. Nevertheless, you can calculate it by yourself. 

To do this, open your YouTube AdSense account and hit “Settings.” Go to “Payments” and find the numbers that you have for the past month. 

Go to “YouTube Analytics” and check how many views there are at the “Monetized Playbacks.” Now, use the following formula for your computation: Your monthly income / The number of monetized views X 1,000. 

For example, you made $300 last month and received 50,000 views. Divide $300 by 50,000 then multiply it by 1,000 and you’ll get 6. 

This means you earn $6 for every 1,000 views. This is your RPM value, and to get a bigger RPM, you need to work on getting bigger YouTube CPM rates

The Dynamics of YouTube CPM 

You already know how to compute for your RPM. What are the elements that allow you to make money from a CPM? What are the dynamics of YouTube CPM? 

To earn your RPM and CPM, YouTube users must view some of the ads that you inserted in your videos in their entirety. However, there are ads where you can earn even if users don’t finish them. However, you will not earn a single penny if users decide to skip on the ads. 

This is a crucial factor since some viewers use ad-blockers to keep those ads at bay. As the name of the software implies, the ad-blocker blocks the ads on your YouTube content. If users cannot see the ads, then you don’t get a chance to make money out of them. 

Understanding YouTube Ads 

Now, let’s take a look at the different Ad types you will encounter on YouTube. As we mentioned earlier, you will get to pick the types of ads that you will insert in your content. 

The first ad type is skippable ads. As the name implies, users can skip these ads. These ads also last between six seconds and 30 seconds. 

However, it doesn’t mean that you don’t get to earn anything if they hit the skip button. As long as viewers watch a total of 30 seconds of all the ads in your content, YouTube will pay you. 

Another type of ad is non-skippable ads. These ads last a total of 20 seconds and can appear at the start or in the middle of your video content. These are the ads that users have no choice but to watch if they want to continue viewing your videos. 

Lastly, there is the bumper ad, which appears within the actual video content. Unlike the skippable and non-skippable ads, bumper ads only last a maximum of six seconds. 

YouTube will also pay you if users watch a total of 30 seconds of these ads. 

To get the most out of these YouTube ads, don’t settle for a single type. Instead, use a variety of ads for your content. If you’re using a non-skippable ad that's 30 seconds long, it's best to put it pre-roll. 

Thereafter, you can insert bumper ads along the way if you want. 

Increasing Your CPM Rates: Start with Your Content 

Now, let us discuss some of the best ways to increase your CPM rates. Since your content will serve as the medium for the YouTube ads, you need to focus on the quality of your video content. 

Your content will be the biggest factor that will attract both your target market and advertisers to visit your channel. Thus, you need to come up with relevant topics that will draw the audience. 

Also, you need to check what your direct competitors are doing. What type of content are they publishing on YouTube? This doesn’t mean you should copy them. 

You always want your content to be original. Thus, follow the trends but come up with something fresh and different. 

The goal is to create videos relevant to your target market. Once the number of viewers increases, the advertisers will follow suit. 

SEO Counts 

Even on YouTube, your search engine optimization (SEO) counts. For starters, make sure the titles of your videos are SEO-friendly. This means using only at least one relevant keyword in your titles. 

Also, you want your titles to be direct. You want your viewers to have an idea about what to expect from your videos. 

Avoid click-baits. YouTube can flag your videos if they are click-baits in nature. Moreover, click-baits can reflect negatively on your brand’s reputation. So will inappropriate videos or ones that go against YouTube's terms and conditions.

Additionally, make sure your video descriptions come with relevant keywords. They should also give a clear and concise summary of what the videos are about. 

Know Your Audience 

Since your goal is to increase your audience reach, you need to know your target audience to the core. To do this, ask yourself what your ideal audience should like. 

Thereafter, use Google Analytics to see the kinds of videos your target audience tends to watch. Look at the likes vs dislikes ratio of your videos. This is a great way of determining the types of content your followers do not want. 

Understand the Advertisers 

Aside from understanding your audience, you also need to know what the advertisers are looking for. Even if your audience is your main focus, create your videos to attract advertisers as well. 

As soon as the advertisers come in, you can start looking at the analytics. Find out which of your videos attracted more advertisers. Are they the shorter ones or the longer ones? 

What themes and topics received the most attention from advertisers? 

Things to Avoid 

Last but not least, you need to avoid certain practices that may hurt your YouTube CPM. Here are some of the damaging video tactics to avoid: 

• Using foul language 
• Publishing inappropriate images 
• Posting sensitive political topics 
• Using hate speech and bullying 

Avoid these things and increase the chances of enticing advertisers to your YouTube channel videos. 

Become a Master of YouTube and Other Platforms 

Learning how to use YouTube CPM is one of the best ways to grow your channel. It is also a great way to build an audience and establish a solid reputation online. But YouTube CPM rate optimization is only one of the many ways to earn money online. 

We invite you to check our other articles on YouTube and other video-first platforms. We discuss video marketing tips that will help your brand grow faster in these trying times.

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